When commercial real estate is placed into a foreclosure receivership, the court can oversee its management while the associated legal case is pending. Until the last legislative session, receiverships in Arizona had been governed by two statutes and a procedural rule. Now, with the enactment of Senate Bill 1216 (SB 1216), there will be changes to the regulations surrounding Arizona foreclosure receivership of commercial property. ?Here are some of the revisions to Arizona foreclosure receivership that have come from the passage of SB 1216 and the adoption of the Uniform Commercial Real Estate Receivership Act.
In the past, A.R.S. ? 12-1241 and 12-1242 were the statutory authority for court commercial receivership orders. However, there was little guidance when it came to resolving conflicts with other slaws that applied to the same property.? Many other states also found that there was an overall lack of uniformity with receivership laws. In an attempt to address the issue, states such as Utah and Michigan adopted the Uniform Commercial Real Estate Receivership Act (?UCRERA?) as a means to clear up ambiguities.
SB 1216 and Arizona?s UCRERA
During the last session, the Arizona legislature adopted its own version of the UCRERA with the passage of SB 1216. Here are some of the critical features of the Act:
- Sets out when a court may appoint a receiver;
- States the receiver?s powers and duties;
- Indicates the owner’s powers and duties;
- Applies to an interest in commercial real property and personal property related to or used in operating commercial real property. However, the Act will not apply to an interest in real property improved by one to four dwelling units unless the units were used as part of a commercial endeavor.
- Just as in bankruptcy, when the receivership order is entered, the automatic stay goes into effect.
Arizona?s new version of the Act has several other provisions, some of which differ from the model version of the UCRERA.? The intent of the Act is increase clarity and efficiency in how commercial real estate receiverships operate in Arizona.
Laura B. Bramnick is an experienced real estate attorney who can help you evaluate and solve issues related to your commercial real estate transaction.? If you are seeking an exceptional, client-driven real estate lawyer in Scottsdale, Phoenix, Sedona, and throughout the State of Arizona, contact Laura B. Bramnick to schedule your consultation.